Developing the Tara Hills farm in today's world: the risks and returns

Abstract

The economics of the development transition from an average high country enterprise dependent to various extents on hay, to an all-grass wintering enterprise (involving further development of hill country) such as that at Tara Hills, was investigated with the assistance of the dynamic economic model RANGEPACK HerdEcon. Transitional options ranged from 'do nothing' through 18 development scenarios that included factorial combinations of the following variables: three different levels of hay-making costs ($30 000, $60 000 and $90 000 per year) for the average enterprise; failures in oversowing establishment (0, 1 or 2 years out of 5); and either maintaining or increasing by 13% stock numbers subsequent to development. Each transitional option was evaluated over a 20-year period involving real climate effects. Shifting from the $90 000 hay enterprise, and incurring zero establishment failures, allowed an economic position better than 'do nothing' to be achieved in 8-9 years. Where the average high country enterprise was less dependent on hay ($60 000 and $30 000 hay operations) the period required to achieve a cash posltlon htterthan-'do-nothing'- took longer (12 to 20 years respectively). The economic leverage gained from the original enterprise with high hay costs compared to those with lower hay costs was far more influential than the other variables tested establishment failures, climate and stocking rate). Keywords: climate variability, dynamic modelling, economics, high country, pasture systems, transition